In Walmart’s culture, one of the company’s central missions is to be an agent for its customers. That is, discover what the customers want or need and provide same. The last part of that mission is getting the goods onto store shelves. And according to reports in Bloomberg News, the New York Times and elsewhere, Walmart has cut employee hours so deeply that it doesn’t have enough associates on hand to get stuff from back-of-the-store staging areas to the shelves.

It is creating what in retailing is known as out of stocks—gaps in the shelves where products should be but aren’t. Obviously, stuff that isn’t there can’t be sold. A number of accounts quote shoppers as leaving Walmarts empty handed and heading for competitors. Walmart says there is no problem, bar the occasional stockout here and there—hard to avoid when you are running 4,500 stores. The company says it has a 90% to 95% in-stock level. But there is no debating that Walmart cut its operating costs in the past year. According to its most recent annual report, Walmart’s U.S. stores grew operating income faster than sales during fiscal 2013, reducing operating expenses by 27 basis points over the prior year. That means Walmart took $740 million out of its cost structure. Some of that is labor; the question is whether service has suffered as a result.

Walmart is supposed to have the most sophisticated supply chain management system in the industry. Along with its biggest vendors, such as Procter & Gamble, it has been an early and powerful practitioner of automated replenishment. As goods are purchased nationwide, the computers in Bentonville automatically spew resupply orders. Tons of programming muscle has gone into making sure everything from Pampers to potatoes are delivered to stores with incredible efficiency. Even the trucks are programmed to take the most efficient routes, so as to waste neither time nor fuel.

And then all of it is unloaded into those back rooms at the rear of the stores where employees using pallet jacks and hand trucks transfer the goods to the shelves. (Except for products that are “direct store delivered” —DSD— such as bread, chips and soda, which are replenished by route drivers, for Pepsi, say.) And this is where the system may be breaking down. In the course of covering the company, I’ve been in the back rooms of hundreds of Walmart stores. They are marked by a bit of organized chaos (and the smell of bulky bags of dog food), which is why the stockers are really important. Ultimately, no amount of supply chain computer wizardry can eliminate Walmart’s need for muscle power to get the goods on the shelves.

This isn’t just about a few customers leaving stores empty handed, either, because inventory management goes to the heart of what Walmart does. The economics of retailing are a circular: You order stuff, it’s delivered, and you have 30 days to pay for it. The faster you can sell the merchandise, the less it costs you to finance, which is why inventory turns are a critical measure of retail efficiency. Globally, Walmart turns its entire inventory eight times a year (compared to 6.4 times a year for Target, for example). Ideally, you want to turn your inventory in less than 30 days — that way, your vendors are financing your inventory, not you. Faster velocity lowers costs, meaning you can then charge less, which increases velocity and lowers costs more — it’s this kind of virtuous circle that made Walmart king. So any speed bump, anywhere in the system, screws everything up.

In retailing, there’s a constant push and pull among the merchants, supply chain managers, and store operators. It’s something Walmart hashes out every week at its Saturday morning meetings. Trouble is, in a low sales growth environment — and Walmart has struggled lately to increase same-store sales — there’s enormous pressure to hold down labor hours and other variable selling costs to boost profits. Yet in areas such as produce, where Walmart has never been particularly good, attention to display, color, and freshness of fruits and vegetables is critical — and labor intensive.

So the order to cut hours has likely been obeyed, if reluctantly, by store managers. But how do you maintain service levels with fewer man-hours? Walmart’s front-end managers are supposed to open another register any time there are more than three customers in line. The cashiers have to come from some other part of the store—the back room, which is invisible to the customer, is one such place to grab bodies. Maybe the hope is that the night stocking crew can catch up. If that doesn’t happen, the goods may be piling up. And even if Walmart’s claim of an 90%-to-95% in-stock position is true, that’s not so great. Given the inventory level in domestic Walmart stores—$25.8 billion, based on its last annual report—that means the company could be foregoing $1.29 billion to $2.58 billion in potential sales. One analyst figured that Walmart would have to spend $448 million to increase the number of sales associates by 5 per store. But if they are selling that much more, and the goods move faster, it would seem like a good deal all around. Especially if the customers are happy.

The original version of this article said that Walmart saved $7.4 billion by lowering operating expenses; the correct figure is $740 million.

walmart not happy that congress cut food stamp . u know why that is reason walmart making a lot of money if food stamp running. also walmart buying goods from china, mmmmmmm that how walmart so bigger money maker, but its nice but not good for America people workers who needs a gob to making things in past. ,,,,,,, I bought shoes as sneakers. ok very comfort and fit right size for my feet to walking. ok then after I bought I looked bottom of my shoes almost wearing out, only !!!!!!!! about 3 weeks, I never saw that.. I have another sneakers cost a bit more but its last more than 1 yr . I looked bottom of shoes still almost new, bought from Biillard store !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! .........its name is all terrain model is NB company ..

our store added 'self' check out' I can tell you..i LOVE IT! have one cashier up there and she/he handles about 8 different registers... (about)...things are changing..but I just want to add that some things are changing for the better...when I go to a store that doesn't have self-check out I find me catching myself, 'you mean I have to wait in line!' ;) lol...spoiled brat here...

would like to check your 'sources' you saw the pic..are you freakin' kidding me!? all that stuff in the back room??? they cut our hours...but are still expected to work just as fast as if the staffing were on target...THERE IS NO MERCHANDISE IN THE BACKROOM THAT COULD BE ON THE SHELF!?? hello...

@ cjtvww, It's really not that difficult to stock shelves when your manager tells you to. Manager tells you to move this feature over there, or over here. Isn't that what WalMart is paying the workers to do in the first place? WalMart is paying its workers to work, so why is there an issue if manager wants something moved? By the way, I have done that type of job too. I've stocked shelves, bagged groceries, and worked as a cashier. I know it doesn't take much skill or an education to do either of those jobs. If you think doing those types of jobs is stressful try spending 15 months in Iraq. If you don't like the job, then leave or better yet, go get a REAL skill and/or an education that will aid in you getting a job you desire.

@will2wrath really? wow..then find me a job!! I have a bachelors degree in psychology and was following the same pattern..way back when 'get a degree in anything..they all like degrees' ...years later I am working at walmart...why? they pay more than any job I can get with my degree... plus..a monkey can do this job (you're right there) so there is no stress, they work with my hours/days I can work...but if you think jobs are just sitting there waiting to be handed out..one question, 'where do you work?' cuz my husband has been trying to find a job for sometime and the highest he can get is minimum wage!

@smbrate@will2wrath Where are all the jobs Oblah blah promised? Didn't he promise hope and change? I guess his hope and change is scaring away all the job creators, and then demanding minimum skill and minimum education jobs be paid $15. Ha ha, that will never happen. What is your degree in? I saw one link on yahoo where a lady was complaining about being in debt because of her degree. She had a degree in Psychology. What the heck was she thinking? Just because you spend thousands upon thousands on a degree doesn't mean it's going to get you a job that is going to pay all the bills to include the debt from the degree. Where do I work? On a military base.

@smbrate@will2wrath So you complain about the pay and work conditions. Quit very simple. No other jobs there move. Very easy and simple. Go back to school. Walmart does promote from within. Instead of complaining do something about it. Your an American quit whining and do something. Anything. Walmart only owes you the wages you agreed upon to do a service for them. You accepted now get over it. I'll bet you are one of those that whine that they are to good for the job. Maybe you should be thankful you have one. I don't get blaming Walmart. They didn't cause your problems. Get over yourself and look at those who want to work and can't.

@LarryMellette@smbrate@will2wrath okay dumbass. I understand you are military and went to Iraq and I am thankful for your dedication but that doesnt mean that everyone should bow at your feet everytime you enter a room or kiss your toes because you "risked your life for your nation"....as you told the other person .... you knew what you were getting into as well when you signed up for the military. I have a Bachelors degree in Science in Nursing and am a Registered Nurse. I was working as a nurse for over 20 years and got burnt out so I decided to do sometjing else with my life. I now work as an overnight stocker at Walmart. While it is not nearly as stressful as nursing it can still be stressful. As stated by the other commentor; the General Manager and all the managers above him expect the employees to get the same amount of merchandise stocked whether there are 10 employees or 30 employees there that night and if they have call ins [which does happen pretty much every night because the majority of the employees they hire are young kids who want to go party at night instead of bust there ass to get the shelves stocked] and when they get their check they dont have to worry if it is enough to pay rent cause they live at home with their parents. I work there because I chose to but when I was hired I was also told that I would have a certain amount of hours. That happened for over a year and for the most part has been pretty fulfilling but like any job stressful at times. Then the schedule comes out and I have 7 hours in one week instead of my usual 32 or more. They say its only temporary but somehow I dont think my land lady is going to go with decreasing my rent only temporarily. Yes I have a job and am very grateful for that but what good really is that job if it doesnt allow me to pay my bills or eat for that matter. Yes I can go back to nursing if I want but the whole point was because I was burnt out and I do not really want to go back to nursing. I just feel that if I was promised something [especially from a large company that should be trustworthy] then the promise should be kept and not broken even just temporarily. Your a military person ....instead of being so judgemental why dont you try being American and feeling a little sympathy for your country member instead of making smart remarks that do nothing but hurt people.

If I have said it once I will say it again... IF YOU DON'T LIKE WAL-MART THEN GO SHOP ELSEWHERE.... I mean seriously people, in every town across the nation there are stores other than Wal-Mart! There are stores like Target, Big Lots, K-Mart, and then you also have the smaller stores like Dollar General, Family Dollar, Dollar Tree and more. All of which sell clothes, paper products, dry goods, and refrigerated items. They also have pet supplies and some of them have electronics. Don't sit here and cry about Wal-Mart when you DO NOT have to go there! Grow up already... If you have the time to go to Wal-Mart every week then you have the time to go to another store or two. I myself go to a dollar store and a local grocery chain and get everything I need. You decide.. but what ever you choose don't keep blaming on the store, because they don't make you shop there!!!

I m appalled when I visit the 3 or 4 WALMARTs that I have close to me here in Ottawa.

The problem is not employee shortage, as I often comment to the on-duty managers here. It is the attitude of those working there. On any given day, in the electronics departments for example, you will find young employees texting and using their phones in side isles. You are told "yeah, i'll be right there" when you ask a question but you leave after 5 minutes of being ignored.

Then there are the ones with friends visiting and chatting. And worse, the ones using the internet and the "vest-meetings" where 4 or 6 of the young people are gathered in a side-isle chatting and laughing.

All the while, you see boxes not being unpacked and customers being ignored. On many occasions I have taken pictures of this and sent it to the Walmart stores and never hear back. And weak-managers tell me, when I bring it up at the store, well, "what do you want us to do about it".

The younger generation does not have a retail mind, they are there to get paid and couldn't get arat's ass about service. the older people sees this and they go, why should I bother and do all the work ? I know that's true, my brother works there and his excuse for lazy-ing off is, "well I am working there only for a while, not worth bothering"...

Walmart need to sets stronger rules for its employees and weed out the bad ones instead of using the same old line their managers tell me `well, we give people a chance, and beside, it costs less to keep them then hire new ones`...

In the end, it`s the attitude of the new slackers Milleniums that will undo Walmart... because let`s face it, if they wanted a self-serve, I am sure Walmart would provide one...

@ca.am.pm at least you can find someone working there...before I started working at walmart (nights) I always shopped nights because it was the only time you could find someone to help you..even on days when you did find someone they acted like you were interrupting them..and these are the 'seniors'...been there the longest usually..

@ca.am.pm I think the term you were looking for was "Millenials." The whole stereo type of the whole generation being slackers is just that- a ignorant blanket statement. Myself and many people I know work full-time and have served in the Military. Why don' you try and contribute something to society rather than point your finger at a whole generation.

i pay 30% more for groceries at my local supermarket that uses happy union workers and i can still stay within my $200/month budget. i like the challenge of shopping smarter to buy better quality. i hope to be completely walmart free from now on. you know, i feel a lot better now.

As a former Assistant Manager, I can attest to the fact that all of the errant staffing responsibility does not fall directly onto the Store Manager. Although they are the main point of contact for customer complaints (their name is on every receipt), it is the Market Offices which determine the amount of money to be spent on payroll EVERY week for EVERY store. As an Assistant, it was extremely frustrating to sit and put into the computer a schedule which will provide the best coverage for the customers and still ensure that necessary work is being completed, only to have the Market office call and tell our HR Manager that our schedule is over the necessary hours and has to be adjusted. The ROOT CAUSE of this is by trying to run your business BASED ON WHAT YOU DID LAST YEAR. EXCUSE ME, but this year isn't last year. When I first arrived in my store in Nov 2008, our total store staff was 360 as compared to the 175 that it was at when I left in May 2012. Thats over a 50% REDUCTION in total store associates. This is only part of the reason why WalMart is failing on its instock levels.

@viicorps1ad They are hiring temps & giving them 40 hrs. while cutting existing full-time & part-time associates. I think this was in the pipeline long before the insurance changes because I was told we had too many long-term associates at our store. I fail to see how having a lot of turnover is going to be good in the end as they will have a revolving door of new people. It's a kick in the teeth to existing workers to ask us to train new people in order for them to get the work hours but that's what is happening. They are also making the schedules so inconsistent that no one could go get a 2nd job. Eventually the only people they will be able to hire are college & high school kids who oftentimes aren't good workers. If a Costco or Target came to our city, I bet the majority of our associates would be applying.

Walmart has probably killed more small businesses than any other corporation in world history. Think of all the local hardware stores, groceries, toy stores, pharmacies and other stores that have disappeared in recent years. That's Walmart's doing.

Walmart sells unhealthy cheap food and other products without caring about the environment, their employees or customers. The only thing Walmart cares about is making more money for the already bloated Walton family coffers.

Stop shopping Walmart. Stop buying goods made in China. Change your life style and shop for American made goods. Shop local small business owners. Walmart is a Giant that has used and abused the American public for too long and needs to be stopped. Stop creating Americas problems by deciding not to be one of the problems. Learn how you can become a solution and not the problem. Stop shopping Walmart and learn how to live a life style without Walmart or what they sell you.

As a former Wal-mart associate of 22yrs, I have seen the the stores in the area where I live, fall apart, now being in the supplier side of the business I see backrooms, sales floor, instock conditions on a daily basis, backrooms are full, pallets in between aisles, produce depts with huge outs, poor product, (avocados, tomatoes, limes), lines at the registers, (being asked if I am a manager in the store to get more checkers),I've stood on an aisle and counted over 50 outs in a 24ft section in the pharmacy, another 50 outs in the Isotonics section, and nobody doing a thing about getting instock, My wife and I were Wal-mart die hards at one time, but now do our shopping at Kroger, on a weekly basis.I personally know Store Managers that if you cut them, they would bleed Wal-mart blue, but now curse the very company that they loved.This retail business is not hard, its staff the front end, unload the trucks, stock the mdse, bin the overstock, keep the carts off the parking lot, but....it requires associates, and when the call comes to cut hours, who then is going to staff the checkouts, unload the trucks, stock the mdse and keep the carts off of the parking lot?? nobody---so lines develop, out of stocks develop, carts gather on the parking lot(ever seen a parking lot at midnight?)

I so agree with you. I work for the demo company in the store. So, I see and hear A LOT! And all I can say, I'm so glad I don't for Wal-Mart. I love so many of the associates and they are really good, honest hard working people, who need to be given credit for trying to do the work required of them. But, crap goes down hill. They have been cut so many hours, the "computer" schedules people wierd days and times and if there is only 1 or 2 people scheduled in, like HBA, today and both call in, they have to pull someone else from other departments to zone and stock. Forget about being able to find someone to help an old lady get a big bag of dog food in her basket. For those who have been with WM 10 plus years have had hours cut back and treated so badly, just so they will quit and WM can hire some young person for so much less. Insurance??? Forget that, too, unless you're "Grand-fathered in". I've been saying the Sam Walton has already rolled OUT of his grave, he's the reason we've had so many little earthquakes in and around his home state. His family should be ashamed of themselves for the way their associates are treated.Kind of like the US, taking care of everyone else, but their own.

Before anyone thinks I am blaming or criticizing SNAP recipients or coupon user, I am not. I am simply stating what I have observed. If you have a solution or constructive criticism call, write or email Walmart. The contact information is is on Walmart.com. Feel free to contact the store Manager of your local Walmart and state your concerns is a polite, professional and calm manner.

I have been reading the comments for a couple of days now and I understand the anger and frustration than many people have. I am a cashier at Walmart and I hear many of the same comments from my customers. They are unhappy about long lines and under stocked shelves. It is not just frustrating for the customer, but for the staff as well. Most of the comments seem to be concentrated around the first of the month when SNAP benefits are issued and on the days when other stores run large ads. SNAP recipients get their benefits on the first of each month and come to shop immediately to do their major food shopping. This causes a stocking nightmare. Only so much merchandise can be stocked on a shelf and many items do run out almost as fast as it is put on the shelf. Customers aren't just buying 1 or 2 of an item, they are buying 10 to 15. I know that the employees are trying hard to keep items on the shelf, but at that rate is is almost almost a physical impossibility. The store is crowded and busy and trying to restock and be out of the way of the customer is difficult. Other stores run sale ads anticipating SNAP recipients spending their benefits. We ad match so the cashiers are slower because we have to price override multiple items to match competitors prices. Another issue is the rise in coupon users. I am not talking about the casual coupon user, I am talking about customers coming in with dozens of coupons and 2-3 shopping carts of merchandise. They combine ad matching and double coupons to maximize their savings. The requires price overrides and Key overrides by a CSM if more that 20 coupons are used in one transaction. A lot of discussion goes on at our store about ways to streamline the process and make the shopping experience more customer friendly. I don't know what he solution is, but I assure you we are as unhappy and frustrated by these problems.

Perhaps it is time for large employers not to be allowed part-time employees. If they are going to abuse it and their employees, just to get out of paying subsistence-level wages and benefits, they need to be collared in. Taking over all business in an area has its obligations, and one of them is to not make all the people in that area slaves to one retailer when all the other jobs are gone.

I happen to work as a Zone Manager in a Wal-Mart store. A Zone Manager has 2-3 departments, that they are in charge of , and I can tell you that this article is TRUE. For the 11 departments I am in charge of, I have a grand total of 5 PART TIME associates, most of whom spend 75% of the 4 hour shift they are given on a register because all of the cashiers are also PART-TIME. At any given time we have 50-70 pallets on the floor, that does not get put on the shelves because there is not an associate to run the freight, so managers often try to run as much as they can , along with the other duties they have to get it out. Keep in mind these are items that are not binned in, which is a system that keeps track of the inventory. If the dog food in question is binned in, then a customer buys a bag, the system will send an alert to remove it from the bin and take it to the floor - which we do not have time for either. So the 40-70 pallets on the floor just sit in the backrooms, and money is lost.

I'm not a Walmart hater but I choose not to shop there because lack of service, store shelves area mess and any given day there are large lines with only a few cashiers. Maybe this is just a west coast thing but all the walmarts here suffer from the same issues. More then three in a line and a new cashier is called. Yea right. My local walmart has about 15 plus lines and ive never seen more then a cashiers there regardless of line sizes they just usher you to self checkout that you need someone to help you with anyways when something doesnt scan right. In addition majority of products are cheap. Ill rather pay more for quality and service but thats just my cup of tea.

Walmart is simply the pusher in our own addiction to getting cheap "stuff." Americans want things. And we love that these guys stuck it to the manufacturers and "passed the savings on to us." Unfortunately, the real "stuck-ees" are us. Because while you can salute the system all you want, what really happened was to cut back on the work force, both at the manufacturers and at the store. Jobs were shipped oversees. Profit margins got squeezed. We paid lower prices, sure. But we've asked the remaining workers to work for less - and not just the ones in the store. Result: our productivity is up, but the middle (and lower) income classes work longer for less. So yah, your running shoes are cheaper at WalMart. But you're still paying a price.

People should learn that a job that takes minimum skill and minimum education to do is going to be paid accordingly. If you do a job that only takes a few minutes to learn (stock shelves, count change, bag groceries,.....) then you don't deserve to be paid the $15 that the protesters in NY are demanding. Go out and get a REAL skill and/or an education. If you were raised to think that life was going to be fair to your standard of fair then your parents failed you big time. Life isn't easy, so get over it.

@byst Guess what? Not everyone can afford college! Incase you cant do math I have been out there. Thirty-three years in the workforce.

Not just in retail.I even worked in a hospital and they froze raises for three years because they spent all their money expanding all over ILL

they had none to give their workers. when I was there I got good evaluations and a 5 cent raise and that was before the raise freeze!

Then I worked at Horizon Hobby for seven years. During the last year there, I was harassed by a female coworker and when I went to my boss (many times) they did nothing! They also give 10 cent raises. So don't tell me there are greater perks out there when there isn't if you don't have a collage education!

Just look at what's going on in this article. What do we have? No first-hand facts of any kind whatsoever. The writer rehashes junk he found elsewhere, tosses in a few vaguely connected readily available facts, and runs the whole thing under a photo that totally gives the lie to his main point.

Why do we call this journalism? Why are we bothering to read this tripe? What on earth do all you folks who are commenting think you're reading? Why are you wasting your time here? For crying out loud, if you think this is important and you want to know if it affects you, head over to your own local Walmart and see if it's true in your store! You'll be miles ahead!

The article mentions that they are cutting labor hours but does not give a concise explanation as to why. The reason why they are cutting hours is because of the Health Care Reform Act (a.k.a. Obamacare) anyone who works over an average of 30 hours has to be made full time. In response many companies; not just Wal-Mart are cutting employees hours to make sure they do not go over this average. Fast food restaurants are limiting their part timers to 28 hours and the Home Depot has limited them to 25 hours to make sure they do not go over. Companies are preparing for this now so that they are ready come 1/1//2014. Unfortunately Obama-care is going to hurt people, employees that were working 34-35 hours are now working 10 hours less a week. There are people out there that think businesses should foot the bill, "lets make everyone full time," but that is not the reality of doing business. I am not trying to stick up for Wal-Mart. I personally do not shop there and have heard they do not treat there employees well. I guarantee that as this year progresses consumers are going to notice a difference when shopping, I know I have already encountered business that have been short handed.